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The euro is struggling to break above the 1.1250 resistance level against the US dollar in early Thursday trade, as traders become cautious ahead of tomorrow’s monthly job report from the American economy. If bulls can move edge price above the 1.1250 level, technical buying is likely to accelerate towards the 1.1290 level. Continued failure around the 1.1250 level may see the EURUSD pair sold back towards the important 1.1216 support level.

The EURUSD pair is only bearish while trading below the 1.1250 level, key technical support is found at the 1.1216 and 1.1170 levels.

If the EURUSD pair trades above the 1.1250 level, buyers may test back towards the 1.1290 and 1.1330 resistance levels.

The US dollar continues to consolidate at elevated levels against the Japanese yen currency on Thursday as traders await the latest news from Sino-US trade talks in Washington. Bullish trade talks news could provoke a move higher in the USDJPY pair towards the 112.10 level. Bearish news will likely cause the USDJPY pair to decline sharply back towards the 110.00 support level.

If bulls move price above the 111.60 level, further gains towards the 112.10 and 112.60 levels appear likely.

If the USDJPY pair falls below the 111.00 level, key technical support is located at the 110.60 and 110.00 level.

The price of crude oil was little moved in overnight trading after data from the EIA showed increased inventories. Over the past week, the inventories jumped by 7.9 million, which was higher than the 425K drawdown that investors were expecting. It was also higher than the previous week’s inventories of 2.8 million barrels. The Cushing crude inventories were at 201K, which was lower than the previous week’s 541K. On Tuesday, data from API showed that inventories were at 2.93 million barrels. This month, traders will be focusing on the OPEC meetings, which will happen in Vienna where the members will deliberate on whether to increase or reduce inventories.

Sterling remained close to yesterday’s highs as Theresa May kicked off negotiations with Labor leader, Jeremy Corbyn on how to address the Brexit crisis. The two parties hailed the talks on Wednesday as being constructive. A cabinet minister signaled that the government could accept Labour’s central demand of remaining in the customs union with the EU. This would limit the UK’s ability to negotiate trade deals with other countries. In protest, two cabinet ministers resigned. In a meeting with other EU leaders next week, Theresa May is expected to ask for another Article 50 extension.

In the United States, the S&P 500 notched the fifth day of gains as investors cheered the ongoing trade talks between the United States and China. The index gained by 0.2% and ended near the highest level since October 9. The rally was led by chip makers like Advanced Micro Devices (AMD), which gained by 8.5%. This is because these companies will probably have big wins if the talks with China yield results. Today, Donald Trump will meet with China’s Liu He, who is in Washington for three day of talks.

EUR/USD

The EUR/USD pair was little moved in overnight trading, as investors waited for key manufacturing data from Germany expected later today and the official employment numbers from the US. The pair is now trading at 1.1240, which is slightly higher than the week-to-date low of 1.1180. On the chart below, the pair is slightly lower than the upper line of the Bollinger Bands and is along the 23.6% Fibonacci Retracement level. The Relative Vigor Index (RVI) has continued to gain. The key levels to watch will be the 38.2% Fibonacci retracement level of 1.1280 and the previous low of 1.1185.

GBP/USD

The GBP/USD pair was little moved as traders waited for the outcome of the new talks between the government and Labor. The pair is now trading at 1.3170, which is much higher than where it started the week. On the four-hour chart, the price is slightly lower than the lower line of the Bollinger Bands. The Average True Range indicator, which is a measure of volatility in the market declined slightly while the money flow index declined from 73 to 50. The pair will likely be volatile as the outcome of these talks start to emerge.

SPX500

This year, the S&P 500 index has been on a major upward trend. It has gained by almost 15%. Yesterday, the index reached a high of $2885, which is close to the 7-month high. On the four-hour chart, the price is above the 100-day and 50-day moving averages while the RSI has moved from the overbought level of 70. The On-balance Volume has remained slightly lower. While the index could continue moving upwards, there is also a likelihood that it could rebalance and decline to about the 100-day EMA level of $2800.

GBPJPY is looking bullish in the short-term narrow range, which has been holding since February 19, with upper boundary the 148.60 resistance and lower boundary the 143.70 support level. During yesterday’s trading session, the price successfully surpassed the 20- and 40-simple moving averages (SMAs) in the daily timeframe, improving the ascending move.

The stochastics are heading upwards, but they seem overbought, as the %K line is trying to turn downwards, signaling an overstretched market. The RSI has crossed into bullish territory but has yet to approach the 70 overbought level.

Immediate resistance to further gains would likely come from the upper boundary of the channel, around 148.60. This is also near the March 14 peak of 148.86 so this could prove a potentially difficult hurdle for the pair to overcome. If there is a successful break above this area, further resistance could be met around 149.70, which was a congested region since May of the previous year. Higher up, the March 2018 top of 152.75 would be the next target.

If, however, the upside momentum was to lose steam and the pair reversed lower, support would initially come from the 20- and 40-day SMAs currently at 146.27 and 145.75 respectively. Slipping below these levels could take prices towards the 23.6% Fibonacci retracement level of the upleg from the two-year low of 132.50 to 148.86, near 145.00. Failure to hold inside the trading range and a drop beneath the 143.70 support would switch the focus back to the downside and attention would increasingly turn to the 38.2% Fibonacci of 142.60.

Looking over the market’s last year performance, the pair has been slightly bearish after the pullback on the 156.60 resistance level.

USDJPY bounced back above 111 this week but the 200-day moving average (MA) managed to hold the bulls under control, with the market now set to close with minimal weekly gains. The short-term bias looks positive-to-neutral under the technical perspective as the RSI is losing ground in bullish territory (above 50) and the MACD is rising marginally above its trigger and zero lines. In Ichimoku indicators, both the red Tenkan-sen and the blue Kijun-sen indicators continue the sideway move, suggesting an uninspiring trading for the short term.

Should the price overcome the 200-day MA, immediate resistance could come from the 112 psychological level, while slightly up, last year’s frequently-tested area around 112.50 may also prove challenging. Another leg higher would shift attention towards the 113-70-114.20 region, where any break above it could bring more bullish action to the market, confirming the sustainability of the December uptrend.

On the downside, support could be met between the 20- and the 50-day MAs (110.76-110.95) where the 61.8% Fibonacci of the downleg from 114.54 to 104.64 is also placed. Further losses would aim for the 50% Fibonacci of 109.59 which the bears found hard to clear late in March. However, If the latter proves easy to get through, the next stop could be somewhere between 109 and 108.42.

Meanwhile in the medium-term picture, the three-month view remains neutral as long as the price remains trapped within the 112-107.50 zone. Yet, the positive slope in the 50-day MA, which is pushing hard to reach the 200-day MA, provides some confidence that a bullish outlook could resume once the lines cross each other.

Daily Pivots: (S1) 0.9961; (P) 0.9974; (R1) 0.9996; More...

USD/CHF is staying in consolidation fro 0.9879 and intraday bias remains neutral first. As long as 1.0010 minor resistance holds, further decline is mildly in favor. On the downside, break of 0.9879 will resume the fall from 1.0124 to 0.9716 key support. On the upside, break of 1.0010 minor resistance will suggest that pull back from 1.0124 has completed. Intraday bias will be turned back to the upside for 1.0124/28 resistance zone.

In the bigger picture, focus is back on medium term trend line (now at 0.9849). Decisive break there will argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next support level at 0.9541. Nevertheless, there is still a chance that price action from 1.0128 are forming a consolidative pattern with fall from 1.0124 as third leg. If this is the case, stronger support should be seen between 0.9716 and the trend line to contain downside.

Chinese stocks extend recent rally on news that US-China trade negotiation are completing its final stage. There could even be an announcement of Trump-Xi summit today and Trump meets Chinese Vice Premier Liu He. However, outside China, the markets are just mixed, without clear directions. Economic data released this week so far are rather disappointing, including German, UK and US data. There is risk of a pull back in the stock markets in reaction to trade news as focus immediately turn back to the poor economic fundamentals.

In the currency markets, Canadian Dollar is currently the weakest one for today, followed by Dollar. Both will look into job data to be featured tomorrow. Sterling is the strongest one so far but after all, it's still bounded in familiar range against Dollar, Euro and Yen. There is no clear sign of a breakout yet, just like there is no sign of breakthrough in Brexit impasse.

In Asia, Nikkei closed up 0.05. Hong Kong HSI is down -0.53%. China Shanghai SSE is up 0.65%. Singapore Strait Times is up 0.14%. Japan 10-year JGB yield is up 0.0073 at -0.043, staying negative. Overnight, DOW rose 0.15%. S&P 500 rose 0.21%. NASDAQ rose 0.60%. 10-year yield rose 0.036 to 2.517, back above 2.5 handle.

US-China close to a trade deal, might announce Trump-Xi summit today

News regarding US-China trade negotiations are generally positive. Trump scheduled to meet Chines Vice Premier Liu He at 2030 GMT today (Thursday). WSJ reported that there might even be an announcement of a Trump-Xi summit during the meeting. Bloomberg reported that the draft agreement would give China six years, until 2025, to meet the commitments.

According to unnamed source, under agreement, China pledged to buy more US commodities including soybeans and energy products. Also 100% US owned companies would be allowed to operate in the country. Failure to fulfil these binding commitments would trigger retaliation from the US. There are also some non-binding pledges from China too, which would be implemented by 2029.

However, there is little news regarding how to hand the punitive and retaliation tariffs imposed since last year. Trump previously warned they are necessary "for a substantial period of time" for China's history on missing promises.

Separately White House Economic Adviser Larry Kudlow said "We're covering issues that have never really been covered before, including enforcement". And, "al making good progress, all making good headway, but we're not there yet… we hope this week to get closer." Kudlow also said Liu will remain in Washington for three days and possibly longer.

Emergency bill to avoid no-deal Brexit fast-tracked through Commons by 313 to 312

An emergency bill to prevent no-deal Brexit was fast-tracked through the House of Commons on Wednesday, by just one vote – 313 ayes to 312 noes. The cross-party bill was spearheaded by Labour's Yvette Cooper and the Conservative Oliver Letwin. under it, a legal mechanism is created where the Commons can instruct the Prime Minister to see Article 50 extension in absence of an approval resolution of Brexit withdrawal agreement. It also restrict the Prime Minister's discretion about whether and when to seek and Article 50 extension. The bill will now be sent to the House of Lords on Thursday and passage is generally expected.

EU's objection to more short extension is rather clear though. European Commission President Jean-Claude Juncker already told the European Parliament that "the 12th of April is the ultimate deadline for approval of the Withdrawal Agreement by the House of Commons." And, "if it has not done so by then, no further short extension will be possible." First Vice President Frans Timmermans also told Germany's Die Welt newspaper that "we cannot forever continue this way in the Brexit negotiations and always extend by two weeks." He said, "the British parliament must now make a decision and finally say what London wants."

Meanwhile, PM Theresa May and Labour leader Jeremy held constructive yet inconclusive meeting. Corbyn described Wednesday's discussions as "useful but inconclusive." Labour spokesperson said "we have had constructive exploratory discussions about how to break the Brexit deadlock", and "we have agreed a programme of work between our teams to explore the scope for agreement."

On the data front

Germany factory orders dropped sharply by -4.2% mom in February, versus expectation of 0.3% mom. ECB monetary policy meeting accounts will be a major focus today. US will release Challenger job cuts and jobless claims. Canada will release Ivey PMI.

USD/CHF Daily Outlook

Daily Pivots: (S1) 0.9961; (P) 0.9974; (R1) 0.9996; More...

USD/CHF is staying in consolidation fro 0.9879 and intraday bias remains neutral first. As long as 1.0010 minor resistance holds, further decline is mildly in favor. On the downside, break of 0.9879 will resume the fall from 1.0124 to 0.9716 key support. On the upside, break of 1.0010 minor resistance will suggest that pull back from 1.0124 has completed. Intraday bias will be turned back to the upside for 1.0124/28 resistance zone.

In the bigger picture, focus is back on medium term trend line (now at 0.9849). Decisive break there will argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next support level at 0.9541. Nevertheless, there is still a chance that price action from 1.0128 are forming a consolidative pattern with fall from 1.0124 as third leg. If this is the case, stronger support should be seen between 0.9716 and the trend line to contain downside.

Economic Indicators Update

The financial markets are generally mixed today. News regarding US-China trade negotiation are generally positive with even speculations that a Trump-Xi summit could be announced as soon as today. But they provide no additional lift to market sentiments. Meanwhile, the meeting between UK Prime Minister Theresa May yielded no conclusive results. Meanwhile, it should be noted that economic data have been rather bad so far. For example, just released, German factory orders dropped sharply by -4.2% mom in February. Sentiments could turn sour again if more data disappointment come in.

In the currency markets, Sterling is broadly higher today so far. But again, the Pound is just staying in familiar range against Dollar, Euro and Yen, and there is no sign of a breakout yet. New Zealand Dollar and Yen are the next strongest. Canadian Dollar is currently the weakest one for today, followed by Dollar.

In Asia:

• Nikkei closed up 0.05.
• Hong Kong HSI is down -0.53%.
• China Shanghai SSE is up 0.65%.
• Singapore Strait Times is up 0.14%.
• Japan 10-year JGB yield is up 0.0073 at -0.043, staying negative.

Overnight:

• DOW rose 0.15%.
• S&P 500 rose 0.21%.
• NASDAQ rose 0.60%.
• 10-year yield rose 0.036 to 2.517, back above 2.5 handle.

General Trend:

• Asian chip stocks track US gains
• Samsung expected to issue Q1 guidance on Friday, already issued profit warning on March 26th
• Chinese airlines outperform, China said to plan to cut aviation-development fund charges
• Iron ore producers decline in Australia after recent gains
• Marine/Transportation sector out performs in Japan, brokers and real estate firms lag
• Japan Display rises over 5% amid speculation related to Apple Watch, financing agreement
• Tesla’s Q1 deliveries miss ests, affirmed FY delivery target
• Japanese officials dismiss modern monetary theory; BoJ Gov said idea of not considering deficit seems ‘extreme’
• Tencent prices $6.0B in bonds in upsized offering
• Indonesia Rupiah rises on session, central bank said to allow IDR to strength further
• India Central Bank expected to cut rates later today
• China Vice Premier Liu He to meet with US President Trump Thursday, Trump may also announce meeting plans with President Xi
• Japan consumer earnings in focus: Seven & I and Adastria expected to report after today’s close
• Markets in China, HK and Taiwan will be closed on Friday for holiday

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened -0.1%
• GNC.AU To de-merge global demalting business; to combine grains and oils businesses; creating two independent companies listed on ASX
• (AU) Australia sells A$500M v A$500M indicated in June 2019 notes, avg yield 1.7135%, bid to cover 4.3x
• (AU) Australia Shadow Finance Minister comments on recently released budget: the budget is more of an election document - financial press
• SYR.AU Reports Q1 graphite production 48Kt v 11.2Kt y/y v 45Kt guided
• ECX.AU Said to have interest from multiple parties for Grays Online and Right2Drive - Aussie press

Japan

• Nikkei 225 opened +0.1%
• 8604.JP Reportedly planning to close about 20% of its Japan retail branches - Nikkei
• (JP) Japan Investors Weekly Net Buying of Foreign Bonds: ¥1.24T v ¥1.8T prior; Foreign Buying of Japan Stocks: +¥0.4T v -¥1.1T prior (first time positive since Jan)
• (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BOJ needs to continue easing persistently, will take some time to reach price target - speaking before Parliament
• (JP) Japan Fin Min Aso: No plan to tests modern monetary theory in Japan, an extreme idea like modern monetary theory will weaken fiscal discipline and is dangerous to apply to Japan
• (JP) Japan PM Abe: Japan isn't applying modern monetary theory; Japan is maintaining trust as yen is purchased during times of crisis
• (MX) Mexico Finance Ministry: Meeting in Japan created fruitful dialogue for investment in both countries
• (JP) Japan MoF sells ¥700B v ¥700B indicated in 0.50% (prior 0.70%) 30-yr JGBs, avg yield: 0.540% v 0.587% prior, bid to cover 4.55x v 4.72x prior

Korea

• Kospi opened -0.1%
• (KR) South Korea Feb Current Account Balance: $3.6B v $2.8B prior; Balance of Goods (BOP): $5.5B v $5.6B prior
• 005930.KR Expected to release prelim Q1 earnings guidance on Friday (April 5th) - financial press

China/Hong Kong

• Hang Seng opened -0.1%; Shanghai Composite opened +0.5%
• (CN) The momentum to internationalize the yuan (CNY) has eased in recent years – FT
• (CN) China PBoC Open Market Operation (OMO): Skips for 12th consecutive session: Net: CNY0 v CNY0 prior; Weekly makes no injections or withdrawals via OMO v drain of CNY110B last week
• (CN) China PBoC sets yuan reference rate: 6.7055 v 6.7194 prior
• (CN) China State Council issues draft amendments on several laws related to foreign investment law to ensure its implementation – Xinhua
• 700.HK Prices $6.0B in notes due 2024, 2026, 2029 and 2049 (5 tranches)
• 002396.CN Notes uncertainty regarding bond repayment, cites tight liquidity
• (CN) China to halve payments to civil aviation development fund and national major water conservancy construction – press
• (CN) US reportedly wants to set 2025 target for China to meet trade pledges and wants timetable for purchases of goods and market access, as China Vice Premier Liu He and US Trade Rep Lighthizer begin talks - press
• (US) White House Econ Adviser Kudlow: US-China talks made good headway during trade talks last week; we're not there yet on trade deal but hope to get closer this week; China delegation is in DC for three days of further trade talks and may stay longer

Other Asia

• 2408.TW Reports Mar (NT$) Rev 3.72B -44.7% y/y v -42.7% prior (multi-year low)
• (SG) Singapore Govt approves plans to invest S$9.0B into two integrated casino resorts – Nikkei
• (TH) Central Bank Gov : Key Rate has been low for too long; financial fragilities remain; Baht is moving in line with fundamentals; monetary policy is data dependent

North America

• (US) MAR ISM NON-MANUFACTURING INDEX: 56.1 V 58.0E (LOWEST SINCE AUG 2017)
• BA ABC News: Ethiopian Boeing 737 MAX suffered a damaged angle-of-attack sensor upon takeoff from a bird or foreign object
• (US) Fed's Kashkari (dove, non-voter): doesn't believe US economy is economy or that Fed needs to tap the brakes
• (CA) Canada Trade Tribunal recommends 2 of 7 proposed steel safeguards. removing the bulk of the import restrictions it placed on certain foreign steel products last year
• TSLA Reports Q1 Deliveries 63.0K vehicles v 90.7K q/q; Production 77.1K vehicles v 86.6K q/q; Guides Q1 net profit to be negatively impacted due to delivery volume and pricing adjustments; Affirms FY19 deliveries 360-400K

Europe

• (UK) PM May could request a 9-month delay to Brexit during upcoming EU summit – Sun
• (UK) Parliament passes amendment to making changing Brexit date simpler, blocking a no deal Brexit on April 12th (second vote affirming same vote earlier today)
• (UK) Govt issues statement on Brexit vote today: Disappointing that MPs have chosen to back the EU withdrawal bill; if passed bill would place severe constraint on Govt's ability to negotiate an extension

Levels as of 1:20 ET

• Nikkei 225, flat, ASX 200 -0.8%, Hang Seng -0.3%; Shanghai Composite +0.7%; Kospi +0.1%
• Equity Futures: S&P500 -0.1%; Nasdaq100 -0.1%, Dax -0.2%; FTSE100 -0.3%
• EUR 1.1249-1.1232; JPY 111.52-111.34 ; AUD 0.7128-0.7110 ;NZD 0.6800-0.6776
• Gold +0.1% at $1,297/oz; Crude Oil -0.2% at $62.34/brl; Copper -0.1% at $2.940/lb

An emergency bill to prevent no-deal Brexit was fast-tracked through the House of Commons on Wednesday, by just one vote - 313 ayes to 312 noes. The cross-party bill was spearheaded by Labour's Yvette Cooper and the Conservative Oliver Letwin. under it, a legal mechanism is created where the Commons can instruct the Prime Minister to see Article 50 extension in absence of an approval resolution of Brexit withdrawal agreement. It also restrict the Prime Minister's discretion about whether and when to seek and Article 50 extension. The bill will now be sent to the House of Lords on Thursday and passage is generally expected.

EU's objection to more short extension is rather clear though. European Commission President Jean-Claude Juncker already told the European Parliament that "the 12th of April is the ultimate deadline for approval of the Withdrawal Agreement by the House of Commons." And, "if it has not done so by then, no further short extension will be possible." First Vice President Frans Timmermans also told Germany's Die Welt newspaper that "we cannot forever continue this way in the Brexit negotiations and always extend by two weeks." He said, "the British parliament must now make a decision and finally say what London wants."

Meanwhile, PM Theresa May and Labour leader Jeremy held constructive yet inconclusive meeting. Corbyn described Wednesday's discussions as "useful but inconclusive." Labour spokesperson said "we have had constructive exploratory discussions about how to break the Brexit deadlock", and "we have agreed a programme of work between our teams to explore the scope for agreement."